Rising costs and debt are dragging down many people’s credit scores. If yours is slipping, it’s time to take control. Your score impacts more than borrowing. It can affect whether you’re approved for a mortgage, qualify for a credit card, rent an apartment, or get certain jobs. A lower score can also mean higher interest rates and insurance premiums. The good news is that steady, consistent steps can improve your credit score no matter where you start.
Get Your Credit Score
Start by checking your score. You can find it through your bank, credit card company, the three major credit bureaus (Experian, Equifax, and TransUnion), or free services like Credit Karma. Scores may differ across sources, so stick with one when tracking progress.
Understand Your Score
Scores usually range from 300 to 850, depending on the source (FICO, VantageScore, etc.) and reflect factors like your payment history, credit utilization, credit history length, new applications, and credit mix. The higher the score, the stronger your creditworthiness.
Check Your Credit Report Regularly
Get a free report annually from each bureau at AnnualCreditReport.com. Review for errors and dispute any you find.
Pay Bills on Time
Payment history makes up 35% of your score. Even one late payment hurts, so use autopay or reminders to stay on track.
Lower Credit Card Balances
Keep your credit utilization ratio (i.e., the amount of credit you use compared to your total credit limit) below 30%. Also, watch your spending and pay down debt.
Increase Credit Limits Carefully
Requesting a higher limit can improve your credit utilization ratio, but only if you avoid extra spending. Ask whether the issuer makes a soft or hard inquiry into your credit report. Hard inquiries temporarily lower your score a few points.
Keep Old Accounts Open
Having a longer credit history and more available credit helps your score. If an old card has no fees, keep it active with small charges.
Limit New Applications
Each new account application triggers a hard inquiry, which can lower your score. Apply for credit only when needed and space out requests.
Have Different Types of Credit
A diverse mix of credit types, such as credit cards, car loans, and mortgages, can raise your score, but don’t take on debt just to improve your credit mix.
Resolve Debts
Work with creditors to set up payment plans or negotiate settlements. While they may still appear on your report, the impact will lessen over time. When paying off credit cards, be strategic about which cards you pay off first.
Create a Budget and Track Spending
While it’s great to improve your score, to keep it that way, you need to develop a budget, monitor your spending, and track your account balances. This ensures you know what you can afford, bills don’t fall between the cracks, and debt doesn’t accumulate.
Improving your score takes time, but the payoff is more money in your pocket and better financial options.
If you need assistance with managing your day-to-day finances, I can help. Contact me for a consultation.
